PHILIPPINES

Photo by: simon gurney

Republic of the Philippines

Republika ng Pilipinas

COUNTRY OVERVIEW

LOCATION AND SIZE.

Made up of about 7,100 islands, the Philippines is on the southeastern
rim of Asia and is bordered by the Philippine Sea on the east, the South
China Sea on the west, the Luzon Strait on the north, and the Celebes
Sea on the south. Its land area, which is slightly larger than that of
Arizona, measures 300,000 square kilometers (115,830 square miles), and
its coastline is 36,289 kilometers (22,550 miles). The capital, Manila,
is on the island of Luzon in the highly urbanized National Capital
Region, which is made up of 12 other urban areas including the cities of
Mandaluyong, Marikina, Pasig, Quezon, Kalookan, Valenzuela, Las
Piñas, Makati, Muntinlupa, Parañaque, and Pasay. The main
financial district is in Makati City.

POPULATION.

The Philippine population has more than tripled since 1948, from 19
million to an official estimate of 81.16 million in 2000. From 1995 to
2000, and the annual population growth rate stood at 2.02 percent,
slightly lower than in 1990 and one-third less than the growth rate of 3
percent during the 1960s.

The population of the Philippines is young, with people aged between
15-64 years making up 59 percent of the population, while those under 15
make up 37 percent of the population. Those aged 65 years and above make
up only 4 percent of the population.

In January 2000, the U.S. Agency for International Development (USAID)
warned of the serious consequences of the booming Philippine population.
It predicted the population will double by 2030 based on its 1999 growth
rate of 2.3 percent, giving the Philippines "the equivalent of 58
percent of the current population of the United States [living] on 3
percent of its land area," a situation with "grave
consequences" for the Philippine economy, society, and the
environment.

The country is divided into 3 island groups: Luzon, Visayas, and
Mindanao, known together as Luzviminda. These 3 groups are further
subdivided into 16 regions. The 2000 National Census lists 61 chartered
cities and 73 provinces in the Philippines, with the most populated
regions in Luzon. Four out of ten persons in the Philippines lives in
the National Capital Region and the adjoining regions of Central Luzon
and Southern Tagalog.

SERVICES

According to the 2001 Labor Force Survey, employment in the service
sector rose to 13.2 million in 2000, up from 12.7 million in 1999. The
proportion of workers in the Philippines service sector increased
accordingly, from 45.8 percent to 46.8 percent.

RETAIL.

The Philippines has a variety of retail establishments scattered
throughout the country, from small village-based general stores that
supply all the needs of a small community to a web of specialized stores
in the larger cities. The wholesale and retail sector was affected by
the economic slowdown in 1998, so retailers and wholesalers tried to
increase consumer spending with aggressive marketing campaigns,
quarterly sales, and discount promotions. In 1999 revenue rose to
P145.41 billion from a low of P138.64 in 1998. Around this time, the
retail sector was opened to foreign competition by the Retail Trade
Liberalization
Act, which allows foreign retailers to conduct business and fully own
enterprises as long as they meet certain capitalization (available
funds) requirements.

TOURISM.

According to the Department of Tourism (DOT), which works with other
government agencies to improve infrastructure and guarantee peace and
order in the country, the Philippines was the twelfth ranked tourist
destination in Asia in 1997. In Southeast Asia, the Philippines ranked
fifth, behind Thailand, Singapore, Malaysia and Indonesia. In 1999, 2.17
million tourists visited the country, mostly from East Asia, followed by
North America and Europe. These tourists spent $2.55 billion in the
country. The country offers nearly 12,000 rooms in numerous hotels. To
attract more tourists, as well as to encourage locals to travel to other
areas of the country, the government implemented 5 major programs in
1999. Among these programs were the promotion of community-based
tourism, the rehabilitation of the world-renowned Ifugao rice terraces,
and the promotion of Manila as a multi-faceted destination. Also
introduced were programs geared toward overseas workers and attracting
expatriate (living abroad), third-and fourth-generation Filipinos to
visit their homeland, and programs highlighting cultural artifacts and
national heritage. The Philippines boasts some of the best scuba diving
in the world, and its World War II sites are also major tourist
attractions.

COMMUNICATIONS.

In the early 1990s, the monopoly of the Philippine Long Distance
Telephone Company (PLDT) was abolished and the sector was opened to
competition. Two telecommunications companies, Globe Communications and
Smart Communications, are locked in battle over mobile-phone market
share. By 1999, Globe was leading with 720,000 subscribers, but Smart
followed closely behind. The call-center service business is thriving
with the entry of foreign companies like America Online, Etelecare
International, People Support, and Getronics. Although still in its
infancy, the industry is expected to expand, aided by the availability
of workers proficient in English, suitable facilities, and government
incentives.

INTERNATIONAL TRADE

EXPORTS.

The growth and stability of the Philippine economy is dependent on
foreign trade, particularly on the dollar revenue generated from export.
For this reason, the Department of Trade and Industry (DTI) has
established an Export Development Council to oversee the growth of this
sector as guided by the Philippine Export Development Plan. The plan
uses a comprehensive approach in promoting Philippine exports to world
markets. Another organization that assists the DTI in export promotion
is the Center for International Trade Exposition Missions (CITEM), which
assists Filipino exporters in marketing and promoting their products
through regular trade fairs, trade missions, and other export-promotion
programs and activities at home and abroad.

The primary trading partners of the Philippines have always been the
United States and Japan, both former colonizers. Trade with these 2
countries has accounted for 50 to 60 percent of Philippine exports for
the last 10 years. The Philippines also trades with Singapore, the

Labor-intensive industrial manufacturers dominate the Philippine export
scene. Electronics and semiconductors continue to lead the
country's top-10 export products, generating US$1.74 billion in
1998 and US$2.16 billion in 1999. Officials of the Department of Science
and Technology predict that earnings from electronic exports will reach
US$4.7 billion by 2004. A 1997 government survey revealed that 75
percent of the 784 firms in the country's export-processing zones
were electronics manufacturers, and that these firms account for 59
percent of the country's exports. Other important export products
are machinery and transport equipment, garments and coconut products,
furniture and fixtures, bananas, processed food and beverages, and
textile yarns.

Trade officials have forecast that Philippine merchandise exports are
likely to hit the US$50 billion mark by the end of 2001, up from $35
billion in 1999. Philippine foreign trade continues to increase every
year. In 1998 and 1998, the Philippines posted positive export growth
rates—16.9 percent and 18.8 percent—when those of other
Asian countries were in decline.

IMPORTS.

Imports for 1999 were $30.7 billion. The country's top 10 imports
are electronic components, telecommunications equipment and electrical
machinery, mineral fuels and lubricants, industrial machinery and
equipment, textile yarn and fabric, transport equipment, iron and steel,
and organic and inorganic chemicals. The Philippines has attempted
several strategies to correct the trade imbalance where imports exceed
exports. These strategies range from exchange and import controls to
raising
tariffs
for imported products. Despite these efforts, imports have continued to
surpass exports for the last 30 years, except in 1973. This forces the
government to borrow from international lending agencies to pay for the
products that it imports, which are paid for in foreign currencies,
commonly in U.S. dollars. These loans are compounded by interest, which
further increases the national debt. Over the last 2 decades, this
imbalance has been eased somewhat by the money sent by Filipinos working
abroad to their families, estimated at US$6.8 million in 1999, a
substantial rise over the US$4.5 million figure for 1998.

The major countries importing goods to the Philippines are the United
States (22 percent), Japan (20 percent), South Korea (8 percent),
Singapore (6 percent), Taiwan (5 percent), and Hong Kong (4 percent),
according to 1998 estimates.

BANKING SECTOR.

There are 5 types of banks in the Philippines: universal banks (also
called "expanded commercial banks"), commercial banks,
thrift banks, rural banks, and government-owned banks. Thrift banks,
which include savings and mortgage banks, private development banks, and
stock and savings associations, service mainly the consumer retail
market and small- and medium-size enterprises. The rural banking system
services the needs of the agricultural sector, farmers, and rural
cooperatives. There are 3 fully government-owned banks: the Land Bank of
the Philippines, the Development Bank of the Philippines, and the Al
Amanah Islamic Investment Bank of the Philippines. The banking sector
encountered great difficulty during the Asian financial crisis in 1997,
but owing to past reforms, the financial condition of the Philippine
banking system has been more stable compared to several of its
neighboring countries, and major bank failures have been avoided.

STOCK EXCHANGES.

The Manila Stock Exchange was established by American businessmen in
1927 after a gold boom. In order to protect its investors, the
Securities and Exchange Commission (SEC) was set up in 1936, making it
the oldest securities regulatory body in Asia. The Makati Stock Exchange
was founded in 1956 by some Filipino brokers who felt dominated by the
Americans. For many years, the 2 stock exchanges competed against each
other for clients, but they merged in 1992 after a Supreme Court ruling.
The newly merged stock exchanges commenced commercial operations in
March 1994. Standard and Poor's estimated the
market capitalization
of the merged exchanges at US$48.105 million and trading value was at
US$19.673 million.

OVERSEAS FILIPINO WORKERS (OFWS).

Beginning in the 1980s, lack of employment opportunities and
inflation
at home caused many Filipinos to seek employment in Europe, the Middle
East, and neighboring countries in Southeast Asia through legal and
illegal means. According to labor statistics released in January 2001, a
total of 789,000 documented OFWs left to work abroad from January to
November 2000 as information technology workers, engineers, seafarers,
housekeepers, and nurses, among others. As of December 2000 labor
statistics released by the Inter-Agency Committee on Tourism and
Overseas Employment Statistics reveal that there are 7,383,122 Filipino
professionals working abroad. Money sent home by the OFWs in 1999
amounted to US$6.8 million, a big jump from US$4.5 million in 1998. The
social costs of this phenomenon were also substantial, for it caused the
breakdown of the family unit, carrying with it attendant problems such
as extramarital affairs and increased delinquency among unsupervised
children. An equally disturbing problem was the rampant sexual and
physical abuse of OFWs, especially women, and those victimized by
illegal recruiters.

WOMEN AND CHILDREN IN THE WORKFORCE.

On one hand, economic growth has opened up more opportunities for women,
particularly in export industries; on the other hand, women are first to
be terminated when industries are forced to downsize. Since the Asian
financial crisis in 1997, women have been forced to seek additional
sources of income to supplement their meager take-home pay and are thus
working longer hours than men. A 1998 study revealed that the number of
women employed in the manufacturing sector had decreased by 12 percent,
while those engaged in mining and quarrying increased by more than 16
percent.

A government agency, the National Commission on the Role of Filipino
Women (NCRFW), is mandated to conduct gender consciousness-raising
programs among government policymakers, planners, implementers, women in
government, and non-government institutions. Through its initiative, the
Philippine Development Plan for Women was formulated and adopted by the
government. Another agency, the Bureau of Women and Young Workers, a
subordinate agency of the Department of Labor and Employment, looks
after the interests of working women and children. There are laws in
place protecting women from gender discrimination and sexual harassment
and establishing community day-care centers for children, but the
implementation of these laws is not always strictly monitored.

Though the minimum age of employment is 18 years for hazardous jobs and
15 years for non-hazardous jobs, it is not unusual to see children
engaged in some form of labor to contribute to their family's
daily survival. A government survey in 1995 estimates that 3.6 million
children, mostly boys aged 5 to 17 years, were engaged in some form of
child labor. At least 1 in 10 of them is engaged in heavy physical work.